TITLE:
Corporate Quasi-Strategic Alliance via Outsourcing Transactions
AUTHORS:
Ning Gao
KEYWORDS:
Outsourcing, Cross-Autocorrelations, Stock Returns, Lead-Lag, Accounting Performance
JOURNAL NAME:
Theoretical Economics Letters,
Vol.8 No.3,
February
13,
2018
ABSTRACT: This paper relates outsourcing
parties together and tests whether the outsourcing contracts have any impact on
the relationship of the two parties’ performance. Both the ex-anti and the ex-post changes in stock and accounting
related performance of the contract signatories are examined. We find that
after the contract effective year, there is
statistically significant cross-autocorrelation between client and
vendor firms’ stock returns. What’s more, on average daily returns of the client stocks lead those of the vendor
stocks. We also find that accounting performance
changes between the two parties show significantly higher level of cross-correlation than pre-event. Our finding of
an increase in cross-autocorrelation between
the ex-post performance of client and
vendor firms indicates that corporate outsourcing transactions result in
a quasi-strategic alliance.